Budget 2014: Duty-free tobacco limits to fall   8 May 2014

Duty-free tobacco allowances will be cut as a further step towards reducing the harm caused by smoking, Associate Minister of Health Tariana Turia says.

This means that from 1 November this year, the duty-free allowance will fall from 200 cigarettes to 50 cigarettes. The new limit aligns New Zealand with the duty-free tobacco concession that has been in place in Australia since 2012.

“Although it’s pleasing to see that fewer young people are taking up smoking, it still causes up to 5,000 premature deaths in New Zealand every year,” Mrs Turia says.

“The Maori Party has been instrumental in a number of Government initiatives aimed at reducing smoking - including a rise in the tobacco excise tax.

“But it is an anomaly that on the one hand we’re increasing the price, and on the other hand we’re offering a duty-free allowance on 200 cigarettes to every adult arriving at our borders.”

The price differential between retail tobacco and duty-free tobacco will continue to grow with two further 10 per cent increases in the rate of excise scheduled over the next two years, Mrs Turia says.

“I considered recommending that the duty-free allowance be removed entirely, and although that would be consistent with the Government’s goal of making New Zealand effectively smoke-free from 2025, it would not be practical.

“Completely removing the duty-free concessions would mean that smokers, who might have a packet or two of cigarettes on them when going through Customs, had to either dump them or declare them and pay duty. If they did neither, they would risk prosecution and seizure of the goods.

“Either way, it would have potentially created considerable compliance costs for Customs in processing passengers at busy airports. Consequently, the Cabinet has agreed to reduce, rather than remove, the allowance.”

The new duty-free tobacco limit is forecast to raise $50 million in extra revenue over a full financial year.

“It makes sense for us to match Australia’s duty-free limits for tobacco, given that nearly half of all our inbound passengers come from, or via, Australia,” Mrs Turia says.

Along with the reduction in the duty-free concession, from 1 November tobacco will be removed from the gift concession that currently allows gifts sent from overseas to be free of duty and GST when they arrive in New Zealand, providing they exceed no more than $110 in total value.

Budget 2014 will include additional funding for New Zealand Customs Service of $2.7 million in 2014/15, and $420,000 in the following years to assist with implementation of the new rules.

Ends

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